An investor has raised pointed questions regarding the company's executive compensation strategy.

A post from a young shareholder on social media, detailing the recent annual general meeting of NAYUKI, has highlighted the intense and critical questions posed by attendees, bringing the former "world's first new-style tea drink listed company" under intense scrutiny.

Despite reporting losses in four out of the five years since its IPO, with its stock price plummeting over 96% and market capitalization evaporating over HK$30 billion, the company's founders, Peng Xin and Zhao Lin, received combined annual salaries of HK$3.1 million last year.

This has proven difficult for many investors to accept, particularly those present at the meeting who have suffered significant paper losses over years of holding the stock, contrasting sharply with the post's author who noted a minimal investment.

Tracing the company's capital market journey, its share price has collapsed from the IPO price of HK$19.8 to approximately HK$0.65 today, a decline exceeding 96.7%, having once hit a low of HK$0.58.

The market capitalization has shrunk from over HK$30 billion to a mere HK$1.1 billion.

The weak stock performance mirrors a financial record of consistent losses. Over five years as a public company, it reported a profit only in 2023, a modest HK$13.22 million, while incurring substantial losses in the other four years.

Cumulatively, the losses over this period amount to HK$6.137 billion, making it the only company among five listed Hong Kong new-style tea drink firms to see revenue decline and report consecutive annual losses.

It is noteworthy that among these five companies, NAYUKI, the sole loss-maker, does not have the lowest executive pay. For instance, the founders of another chain, which reported a net profit of HK$500 million last year, each received an annual salary of only HK$523,000.

This disparity has fueled shareholder dissatisfaction. Attendees reported that a shareholder pointedly asked if management salaries, which have increased yearly, could be linked to company performance, suggesting a symbolic one-dollar annual salary for the chairman with other income tied to incentives.

In response, Peng Xin stated that neither founder had sold shares post-IPO and argued that a one-dollar salary was impractical as Zhao Lin "needs to live on his salary."

Unlike peers who distributed significant dividends around their listings, NAYUKI has not paid dividends, primarily due to a lack of profits.

Key Operational Challenges

The core issue lies in its direct-operated store model, which distinguishes it from other major chains. Approximately 79% of its stores are company-operated, contributing 88.3% of total revenue.

In contrast, other profitable brands largely rely on franchising, generating revenue from franchise fees and sales of products and equipment to加盟商. For example, over 97% of one major competitor's revenue comes from selling ingredients and materials to its franchisees.

NAYUKI only began franchising in the latter half of 2023, arguably missing the optimal window. Management has since indicated that high initial investment costs and weak payback periods for加盟商 are key concerns, suggesting a focus on long-term partners rather than short-term gains.

This approach reveals a defensive stance towards franchising rather than a full embrace of the model used successfully by others, aiming primarily for survival rather than mutual high returns with加盟商, which limits potential收益.

Store metrics reflect these challenges. After a brief increase post-franchising launch, the total store count has consistently declined, dropping by 248 stores by the end of 2025. Company-operated stores saw a reduction of 309.

Financially, after briefly turning a profit in 2023, the company fell back into loss.

Shifts in Product Strategy

The traditional "one drink, one bread" model is also under pressure. Financial reports show revenue from in-store counter orders has declined significantly, while delivery orders now exceed 50% of the total, indicating a shift towards convenience.

This change in consumption patterns has reduced the suitability of the traditional fresh-baked bread model. To cut costs and adapt to the delivery-centric environment, the company has quietly transitioned from baking bread on-site to using pre-made, refrigerated products that are reheated in stores.

Management defends this move, stating it ensures more consistent quality and optimizes costs, as fresh bread cools and loses quality in display cases. However, some consumers and long-term shareholders view it as a cost-cutting compromise that betrays the brand's original promise.

Underlying Strategic Issues

Ultimately, the shareholder criticism and consumer discontent point to deeper doubts about the company's rigid business model. While the industry has broadly moved towards profitable franchising models, NAYUKI has been reluctant to fully adapt, maintaining a higher-priced positioning and exploring avenues like bottled water and light meals, seemingly stuck in the mindset of its growth phase rather than adapting to the current market reality.

From its peak as a trailblazing listed company, NAYUKI has fallen far behind its peers, now a penny stock with a fraction of its former value, mired in controversy and sustained heavy losses. Faced with mounting pressures from continuous losses, valuation collapse, and business contraction, this established tea drink giant may be approaching a delisting crisis before it can achieve a turnaround.